Ancient storytelling traditions kaleidoscope to life in two texts by contemporary writers. Rats' Tales sashays out of shadow-fraught European forests in Carol Ann Duffy's new interweaving of folk tales with her own original stories. Dominic Cooke's colourful Arabian Nights shimmer to life surrounded by shifting desert sands. These tremendous productions from the Royal Exchange and the Manchester Library theatre company both offer a compendium of all that is best in the re-theatricalisation of the British stage that has been underway for the past 100 years.

Directors Melly Still (Tales) and Amy Leach (Nights) know well how to beguile time and transform space. From "once upon a time" to "happily ever after", morph-master performers conjure marvels from the simplest props in complicity with the audience's imagination. A bitter old woman swaps shadows with her daughter to regain her youth in Duffy's own "The Stolen Childhood". A black cloth, a dark coat and subtly skilful body-and-voice work from the excellent Katherine Manners and Kelly Williams as mother and daughter make this dark story terrifyingly real; also, astonishingly surreal in a dream sequence of a youth (luminescently talented Hiran Abeysekera) walking on air (to see is to believe).

Arabian Nights similarly deploys cloth and talent to transform horsemen into a mountain, princes into boulders and a rug into a flying carpet, as Rokhsaneh Ghawam-Shahidi's brilliant Shahrazad performs the most astonishing transformation of all – reawakening the disillusioned king's interest in life (regal Emilio Doorgasingh).

Original live music – Dave Price (Tales) and Arun Ghosh (Nights) – shivers spines, sets toes tapping, raises laughs or pricks tears. Full of darkness and light, these tales thrillingly explore the mysteries of the human heart.